Cobb-Vantress, Inc.

About Cobb-Vantress, Inc.

Tyson Foods spreads its wings beyond the chicken coop. While
it's one of the largest US chicken producers (processing some 40
million a week), Tyson's Fresh Meats division makes it a giant in
the beef and pork sectors. The company also offers value-added
processed and pre-cooked meats and refrigerated and frozen prepared
foods. Its chicken operations are vertically integrated -- the
company hatches the eggs, supplies contract growers with the chicks
and feed, and brings them back for processing when ready. Tyson's
brands include Tyson, Jimmy Dean, Hillshire Farm, Ball Park,
Wright, Aidells, and State Fair. Its customers include retail,
wholesale, and food service companies worldwide.

Operations

In terms of volume Tyson Foods is, indeed, a chicken company,
processing about 40 million chickens a week compared to 456,000
pigs, and 165,000 head of cattle at its 100 food production plants
worldwide. But when counting dollars instead of eggs, the company
makes 40% of its revenue from its beef segment and 30% from its
poultry operations. Prepared foods and pork products contribute
about 30% and 10%, respectively.

While its chicken operations reach from egg to drumstick, Tyson
raises no cattle of its own. It buys live cattle on the open market
and they're raised under contract at third-party feed lots. The
majority of Tyson's swine are bought from producers; however, it
does raise some swine and supplies feeder pigs to independent
producers on a contract basis.

Tyson's wholly-owned subsidiary Cobb-Vantress Inc. is a top
poultry breeding stock supplier globally that leverages research
and development to breed desirable characteristics into its
flocks.

Headquartered in Springdale, Arkansas, Tyson Foods serves retail
and foodservice customers across the US and in about 115 countries
worldwide. Tyson's major export markets include Canada, Central
America, China, the European Union, Japan, Mexico, the Middle East,
South Korea, and Taiwan. Export sales from the US total about $3.5
billion annually, or roughly 10% of total revenue.

Sales and Marketing

Tyson Foods' products are marketed to grocery stores, meat
distributors, club stores, military commissaries, chain
restaurants, and foodservice operators, among other customers.
Walmart accounts for nearly 18% of Tyson's sales.

Tyson's products are marketed and sold primarily by its sales
staff to grocery retailers, grocery wholesalers, meat distributors,
warehouse club stores, military commissaries, industrial food
processing companies, chain restaurants or their distributors, live
markets, international export companies and domestic distributors
who serve restaurants, foodservice operations, cafeterias,
convenience stores, hospitals, and other vendors. Additionally,
sales to the military and a portion of sales to international
markets are made through independent brokers and trading
companies.

Tyson promotes its products with marketing, advertising, trade
promotions, and consumer incentives such as coupons, discounts,
rebates, and volume-based incentives. The company spends about $240
million a year on advertising and promotional expenses.

Financial Performance

Tyson Foods posted a 4% sales increase to about $38 billion in
2017 (ended September) from 2016. Though its sales rebounded
year-to-year, 2017 revenue was off from the peak of about $41
billion in 2015. The company reported higher revenue from beef,
chicken, pork, and prepared foods in 2017 because of higher demand
that outpaced increased supplies.

Net income was flat at about $1.8 billion in 2017 and 2016
because of charges in the chicken and prepared food segments. Both
segments had charges related to the acquisition of AdvancePierre
and prepared foods had additional charges related to its San Diego
facility.

Cash flow from operations slipped to $2.6 billion in 2017 from
$2.7 billion in 2016 because of higher accounts receivable and
inventory.

Strategy

Chicken, beef, and pork have at least one thing in common:
they're protein. And that's what Tyson Foods is placing its bets
on. The company is going all-protein, all the time, selling its
non-protein businesses Sara Lee Frozen Bakery, Kettle, and Van's.
As it focuses on sources of protein, Tysons committed itself to
producing that protein sustainably. It says that investments in
sustainability should reduce waste and costs.

To help it develop more protein products, Tyson Foods is backing
a $150 million fund to invest in food innovation. New Tyson
Ventures focuses on commercializing alternative proteins;
addressing food insecurity and food loss through commercial models;
and promoting better use of resources, safety, and consumer
empowerment in the food chain. The fund invests in entrepreneurial
food businesses and Tyson provides expertise to accelerate
development. The first investment involves a previous Tyson
investment in plant-based protein producer Beyond Meat.

Besides developing new protein and products, Tyson Foods looks
to run a leaner organization. The company began implementing a
restructuring, what it calls a Financial Fitness Program, in late
2017. The program involves the integration of AdvancePierre and
finding cost cuts in the supply chain, procurement, and overhead
improvements in the prepared foods and chicken segments to reach a
total savings of $800 million by the end of 2020. The program
involves cutting about 500 jobs, most of them in Tyson's corporate
offices in Arkansas, Illinois, and Ohio.

Mergers and Acquisitions

In mid-2018 Tyson Foods announced plans to acquire Keystone
Foods from Brazil's Marfrig for $2.16 billion. US-based Keystone,
which sells chicken nuggets to McDonald's, also makes beef patties,
fish filets, and chicken wings and tenders. The deal provides a
solid foundation for international growth for Tyson Foods as
Keystone has operations in China, South Korea, Malaysia, Thailand,
and Australia.

Earlier that year Tyson Foods became one of the largest
organic branded chicken processors when it acquired Nebraska-based
Tecumseh Poultry, maker of the Smart Chicken brand of air-chilled,
fresh chicken.

In 2017 Tyson acquired prepackaged foods company AdvancePierre
Foods for $4.2 billion and converted the company into a subsidiary.
The acquisition of AdvancePierre Foods' sandwiches, meals, and
other ready-to-eat foods complements Tyson's existing line-up of
prepared meals. The purchase also brought AdvancePierre's food
service, retail, and convenience store provider customers.